Sitharaman hints at income tax cuts
The government is working on more stimulus measures to boost the economy, including rationalisation of personal income tax, finance minister Nirmala Sitharaman said on Saturday.
“There are various ways in which we can give stimulus for consumption. We are adopting a direct method ... we are spending on infrastructure and the spillover benefit will be on core industries and labour,” she said at the HT Leadership Summit here.
Asked if there would be more measures to bolster economic activity, she said, “If I say yes, your question will be when... if I say yes you will also ask, are you not too close to the budget? So I don’t want to say yes although I wish I could. At the same time, I will not say no, because we are working on more.”
When asked if the government was considering rationalising the personal income tax rate for putting more money in the hands of people, the finance minister said, “One among many things that we are thinking of.”
Asked by when the tax relief would be announced and if it will be in the budget, Sitharaman said: “Then you will have to wait for the budget.”
Following the reduction in corporate tax in September, there has been a growing demand for a cut in personal income tax to buttress consumption.
In the biggest reduction in 28 years, the government in September slashed corporate tax rates by up to 10 percentage points as it looked to pull the economy out of a six-year low growth with a Rs 1.45-lakh-crore tax break.
The base corporate tax for existing companies has been reduced to 22 per cent from 30 per cent, and to 15 per cent from 25 per cent for new manufacturing firms incorporated after October 1, 2019, and starting operations before March 31, 2023.
Earlier this month, Sitharaman said the finance ministry will consider a reduction in personal income tax on its own merit and will not try to slash it to bring parity with the decision to reduce corporate tax.
Assuring that there will be no harassment of taxpayers, Sitharaman said the intent of the government is to further simplify taxation systems, including removal of exemptions.
Besides, she said the government has introduced faceless assessment of direct tax and soon this will be introduced in indirect tax to eliminate harassment.
On the goods and services tax (GST) Sitharaman said, the rate structure will have to be decided by the GST Council. Eventually, the rates have to be rationalised and the entire tax system has to be simplified, she said.
On the apprehension raised on the genuineness of data, the finance minister said, “There’s no doubt, we need to bring credibility back to data.”
“The government is aware of the debate which is going on with regard to data and its credibility,” she said.
“The intention is to make sure that any kind of inappropriate methodology which is coming into the data will have to be addressed. So, we will have to work towards better credibility, we have to work towards making available data without any obstruction,” she said.